Setting up a Spanish company
How to Constitute a company in Spain from abroad
Foreign investors or entrepreneurs who are considering living in Spain or starting a business activity here, the first thing they ask themselves is how they can create the company.
What documents are needed? What steps do you need to take to set up a company?
We explain everything you need to know.
Another question that arises is whether to create a new company here or open a branch office.
Creating a company or opening a branch in Spain?
The first thing that a foreign entrepreneur who wants to operate in Spain should consider is whether it is convenient for him to do so through a Spanish company or under his own foreign legal company with the opening of a branch.
Both alternatives are subject to a very similar burden of accounting, tax and administrative obligations, but there are variations, and they must be taken into account when making one or the other decision.
The decision will depend primarily on operational and administrative issues.
Customers and suppliers generally have more confidence in operating with a Spanish company. Especially those who are not used to working with foreign operators.
It is also true that in case of tenders it is necessary to prove certain previous experience so in some cases it would be convenient to open a branch of the foreign company. It will depend on each individual case.
As always, it is best to find out about your specific situation.
What other aspects can influence the decision?
The fiscal aspect. Although tax regulations tend to give the same treatment to companies and branches, it is true that in some cases quantitative differences in taxation arise.
What kind of company? What basics should be taken into account?
If you have decided to incorporate a company, you should consider what legal form to choose from the different types that exist in Spain.
The most frequent are:
- Sociedad de responsabilidad limitada (S. L. ) Limited
- Sociedad anónima (S. A. )
Both have their own legal Identification and limit the patrimonial responsibility of the partners with respect to the social debts.
The S. L. requires a small amount of capital and makes it possible to limit the entry of third parties to the share capital. It is a suitable vehicle for family businesses or businesses with trusted partners.
On the other hand, the S. A. requires a higher capital for its incorporation and, as it is an open company, it is designed for business projects that require a higher number of partners and allows freedom in the entry and exit of the share capital.
The administrators in normal circumstances can be Spanish nationals or residents.
Composition of the administrative body.
The management and administration in Spanish companies can be managed by:
- A single administrator.
- Two administrators together or in solidarity
- Three or more directors forming a Board of Directors.
What are the requirements for the foreign entrepreneur to operate in Spain?
You must obtain a Foreigners’ Identification Number (NIE) if you are an individual or a Tax Identification Code (CIF) if you are a legal entity.
In the case of a legal entity, the NIE must also be obtained from its legal representative and proof must be provided, by means of the corresponding official document from its country of origin, of the existence and validity of the entity, as well as the identity and powers of its legal representatives.
It will also be necessary to identify the actual holder.
First steps to create a company in Spain
1. Company name.
In the case of the incorporation of a company, the first thing to do is to check with the main Mercantile Register that the company name to be registered is available. Once it has been checked that the name is available, a certificate is requested from the CTMR indicating whether or not the chosen name is available.
2. Social contribution.
The cash contribution is deposited with a credit institution which will issue a certificate indicating the names of the founders.
3. Social activity (CNAE).
The corporate purpose is the activity to which the company will be dedicated. In Spain there is a list of activities called CNAE and you will need to identify this code for the activity or activities your company will be engaged in.
4. Draft of the articles of association.
Once the name and contribution certificates have been obtained, the founding partners must draw up and approve the articles of association that will govern the operation of the company.
5. Signing of the deed of incorporation at the notary’s office.
The deed of incorporation must be under notary protocol and must state, among other things:
- Registered office
- Share capital.
- Appointment of its administrators, directors.
6. Registration in the Commercial Register.
The notarial deed, both in the case of the incorporation of the company and in the case of the opening of the branch, must be registered in the Commercial Register of the domicile where they are located, upon presentation of the self-assessment for tax purposes
7-Powers of attorney.
It may be advisable in order to expedite the procedures and compliance with legal requirements, is to grant powers of attorney to an independent lawyer in Spain.
8. Apostille of foreign documents and powers of attorney.
Both the powers of attorney and the foreign documents must be apostilled or submitted to the corresponding legalization process in the country of origin in order to grant them international validity and effectiveness.